Record Q4 EPS of $0.77; Non-GAAP EPS jumps 23%
to a record $0.74 excluding non-routine items
Comp sales increase 5% globally; Consolidated
net revenues increase 10% to a Q4 record $4.2 billion
Company grows dividend 23% and
increases outlook for a strong FY2015
Starbucks Corporation (NASDAQ: SBUX) today reported financial
results for its 13-week fiscal fourth quarter and 52-week fiscal
year ended September 28, 2014. Fiscal 2014 results include the
impact of a litigation credit in Q1 and a net benefit from
transactions in Q4. Fiscal 2013 results include the impact of the
litigation charge associated with the Kraft arbitration in Q4, as
well as gains on the sales of Starbucks equity in its Mexico joint
venture in Q2 and its Chile and Argentina joint ventures in Q4.
Non-GAAP results exclude these items. Please refer to the
reconciliation of GAAP measures to non-GAAP measures at the end of
this release.
Q4 Fiscal 2014 Highlights:
- Consolidated net revenues increased 10%
to a Q4 record $4.2 billion
- Global comparable store sales increased
5%, the 19th consecutive quarter of comp growth of 5% or
greater
- Consolidated operating income reached
$854.9 million
- Non-GAAP operating income of $857.3
million grew 28% over Q4 FY13 non-GAAP operating income
- Consolidated operating margin expanded
to 20.4%
- Non-GAAP operating margin of 20.5% grew
280 basis points over Q4 FY13 non-GAAP operating margin
- Earnings per share reached $0.77
- Non-GAAP EPS of $0.74 grew 23% over Q4
FY13 non-GAAP EPS
- The company opened 503 net new stores
in the quarter, ending FY14 with 21,366 stores in 65 countries
- The Board of Directors declared a cash
dividend of $0.32 per share, an increase of 23%
Fiscal Year 2014 Highlights:
- Consolidated net revenues increased 11%
to a record $16.4 billion
- Global comparable store sales increased
6%
- Americas comp sales increased 6%
- EMEA comp sales increased 5%
- China/Asia Pacific comp sales increased
7%
- Consolidated operating income reached
$3.1 billion
- Non-GAAP operating income of $3.1
billion grew 25% over FY13 non-GAAP operating income
- Consolidated operating margin expanded
to 18.7%
- Non-GAAP operating margin of 18.6% grew
210 basis points over FY13 non-GAAP operating margin
- Earnings per share reached $2.71
- Non-GAAP EPS of $2.66 grew 21% over
FY13 non-GAAP EPS
- Starbucks opened 1,599 net new stores
globally in FY14, including 742 in CAP, 698 in the Americas and 171
in EMEA
- The company returned $1.6 billion to
shareholders through dividends and share repurchases
“Starbucks performance in fiscal 2014 was extraordinary by any
metric or comparison,” said Howard Schultz, chairman, president and
ceo of Starbucks Coffee Company. “But we cannot be content with the
status quo, as consumers continue to demand more and more in terms
of convenience and excellence. You will see us continue to invest
where it counts most, in mobile commerce, innovation, in the
customer experience and the partners who drive it and in the
quality of our coffees.”
“Starbucks Q4 results capped off a year of exceptional
performance across our business and around the world,” said Scott
Maw, Starbucks cfo. “In Q4, each of our segments delivered strong
and balanced revenue and profit growth, consistent with the prior
three quarters of fiscal 2014. The increasing global strength of
the Starbucks brand, a robust pipeline of innovation, strong global
comparable store sales growth and impressive margin expansion in
conjunction with a company-wide emphasis on operational excellence
and expense management give me great confidence in achieving our
2015 growth targets.”
Fourth Quarter
Fiscal 2014 Summary
Quarter Ended Sep 28, 2014 Comparable Store
Sales(1) Sales Growth Change in
Transactions Change in Ticket Consolidated 5%
1% 4% Americas 5% 1% 4% EMEA 5% 2% 2% CAP 5%
6% (1)% (1) Includes only Starbucks company-operated
stores open 13 months or longer.
Operating Results Quarter Ended ($ in
millions, except per share amounts)
Sep 28, 2014
Sep 29, 2013 Change Net New Stores 503
558 (55) Revenues(1) $4,180.8 $3,788.8 10% Operating
Income/(Loss) $854.9
$(2,115.2)
nm Operating Margin(1) 20.4% (55.8)% nm EPS $0.77
$(1.64)
nm
(1) Prior period results have been
corrected to reflect an immaterial reclassification of certain fees
related to our foodservice operations; for full revised FY12 and
FY13 results, refer to http://investor.starbucks.com.
Consolidated net revenues were $4.2 billion in Q4 FY14, an
increase of 10% over Q4 FY13, driven primarily by 5% growth in
global comparable store sales and incremental revenues from 1,599
net new store openings over the past 12 months.
Consolidated operating income was $854.9 million in Q4 FY14, an
operating margin of 20.4%, compared to an operating loss of $2.1
billion in the prior year, which included a $2.8 billion litigation
charge associated with the Kraft arbitration. Non-GAAP operating
margin of 20.5% expanded 280 basis points over the prior year
non-GAAP operating margin, driven by sales leverage, improved
inventory management and lower commodity costs.
Q4 Americas Segment
Results
Quarter Ended
($ in millions)
Sep 28, 2014 Sep 29,
2013 Change Net New Stores 279 340 (61)
Revenues $3,041.1 $2,779.5 9% Operating Income $743.0 $605.9 23%
Operating Margin 24.4% 21.8% 260 bps
Net revenues for the Americas segment were $3.0 billion in Q4
FY14, an increase of 9% over Q4 FY13. The increase was driven by 5%
growth in comparable store sales and incremental revenues from 698
net new store openings over the past 12 months.
Operating income of $743.0 million in Q4 FY14 increased 23% from
$605.9 million in Q4 FY13. Operating margin expanded 260 basis
points to 24.4%, primarily due to sales leverage, improved
inventory management and lower commodity costs.
Q4 EMEA Segment Results
Quarter Ended
($ in millions)
Sep 28, 2014 Sep 29,
2013 Change Net New Stores 38 28 10
Revenues $321.8 $293.4 10% Operating Income $38.8 $27.3 42%
Operating Margin 12.1% 9.3% 280 bps
Net revenues for the EMEA segment were $321.8 million in Q4
FY14, an increase of 10% over Q4 FY13. The increase was primarily
due to favorable foreign currency exchange, a 5% increase in
comparable store sales and incremental revenues from 171 net new
store openings over the past 12 months.
Operating income increased 42% to $38.8 million in Q4 FY14, up
from $27.3 million in the prior year quarter. Operating margin
expanded 280 basis points to 12.1%, primarily driven by sales
leverage and continued cost management.
Q4 China/Asia Pacific Segment
Results
Quarter Ended ($ in
millions)
Sep 28, 2014 Sep 29, 2013
Change Net New Stores 199 197 2 Revenues
$309.9 $255.7 21% Operating Income $103.8 $96.0 8% Operating Margin
33.5% 37.5% (400) bps
Net revenues for the China/Asia Pacific segment grew 21% to
$309.9 million in Q4 FY14. The increase was primarily driven by
incremental revenues from 742 net new store openings over the past
12 months. A 5% increase in comparable store sales, driven by
strong traffic, also contributed.
Operating income grew to $103.8 million in Q4 FY14, an increase
of 8% compared to Q4 FY13. Operating margin declined 400 basis
points to 33.5%, primarily driven by the lapping of a prior year
benefit from reduced asset retirement obligations for store leases
in the region as well as the shift in the segment portfolio in the
current year towards more company-operated stores.
Q4 Channel Development Segment
Results
Quarter Ended ($ in
millions)
Sep 28, 2014 Sep 29, 2013
Change Revenues(1) $399.1 $355.5 12% Operating
Income $171.5 $128.4 34% Operating Margin(1) 43.0%
36.1% 690 bps
(1) Prior period results have been
corrected to reflect an immaterial reclassification of certain fees
related to our foodservice operations; for full revised FY12 and
FY13 results, refer to http://investor.starbucks.com.
Net revenues for the Channel Development segment grew 12% to
$399.1 million in Q4 FY14, primarily driven by increased sales of
premium single serve products.
Operating income of $171.5 million in Q4 FY14 grew 34% compared
to the same period a year ago. Operating margin increased 690 basis
points to 43.0% in Q4 FY14, primarily due to lower coffee costs and
other cost of goods sold efficiencies.
Q4 All Other Segments
Results
Quarter Ended ($ in
millions)
Sep 28, 2014 Sep 29, 2013
Change Net New Stores (13) (7) (6) Revenues(1)
$108.9 $104.7 4% Operating Loss
$(13.8)
$(16.5)
(16)%
(1) Prior period results have been
corrected to reflect an immaterial reclassification of certain fees
related to our foodservice operations; for full revised FY12 and
FY13 results, refer to http://investor.starbucks.com.
Year to Date Financial
Results
Year Ended Sep 28, 2014
Comparable Store Sales(1) Sales Growth
Change in Transactions Change in Ticket
Consolidated 6% 3% 3% Americas 6% 2% 3% EMEA 5% 3% 2%
CAP 7% 6% 0% (1) Includes only Starbucks
company-operated stores open 13 months or longer.
Operating Results Year Ended
($ in millions, except per share amounts)
Sep 28,
2014 Sep 29, 2013 Change Net New
Stores(1) 1,599 1,701 (102) Revenues(2) $16,447.8 $14,866.8
11% Operating Income/(Loss) $3,081.1 $(325.4) nm Operating
Margin(2) 18.7% (2.2)% nm EPS $2.71 $0.01
27,000% (1) Net new stores for the year ended September 29, 2013
includes 337 Teavana stores acquired in the second quarter of
fiscal 2013. (2) Prior period results have been corrected to
reflect an immaterial reclassification of certain fees related to
our foodservice operations; for full revised FY12 and FY13 results,
refer to http://investor.starbucks.com.
Fiscal 2015 Targets
The company provides the following fiscal 2015 targets, which
are based on actual FY14 non-GAAP results as presented in this
press release and projected FY15 non-GAAP results where noted.
Projected FY15 non-GAAP adjustments relate to the planned
acquisition of Starbucks Japan; please refer to the reconciliation
of GAAP measures to non-GAAP measures at the end of this
release.
- Revenue growth now expected to be 16% -
18%, including over $1 billion in incremental revenue from the
planned acquisition of Starbucks Japan
- Global comparable store sales growth
continues to be targeted in the mid-single digits
- The planned Starbucks Japan acquisition
is expected to be mildly dilutive to consolidated operating margin
on a GAAP basis versus FY14; non-GAAP operating margin is expected
to be flat to up slightly over prior year non-GAAP operating
margin:
- Americas: modest improvement over
FY14
- EMEA: improving to 10% - 12%
- China/Asia Pacific: Operating margin
percentage in the high teens, which includes approximately 2% to 3%
unfavorable impact from amortization expense related to acquired
intangible assets resulting from the planned acquisition of
Starbucks Japan
- Channel Development: modest improvement
over FY14
- Consolidated tax rate of approximately
31%, which includes a net tax benefit of approximately 4% from the
planned acquisition of Starbucks Japan
- Earnings per share on a GAAP basis
expected to be in the range of $3.42 to $3.54; EPS on a non-GAAP
basis expected to be in the range of $3.08 to $3.13. Additionally,
Q1 EPS on a GAAP basis expected to be in the range of $1.20 to
$1.28; Q1 EPS on a non-GAAP basis expected to be in the range of
$0.79 to $0.81.
- Non-GAAP adjustments related to the
planned acquisition of Starbucks Japan are comprised of:
- An anticipated acquisition-related gain
of approximately $0.43 to $0.49 per share in Q1 resulting from a
fair value adjustment of Starbucks current 39.5% ownership interest
in Starbucks Japan
- Other costs related to the acquisition,
such as the ongoing amortization expense of significant acquired
intangible assets as well as transaction and integration costs
- New store openings increase to 1,650
net new:
- Americas: approximately 650, half
licensed
- EMEA: approximately 150, primarily
licensed
- China/Asia Pacific: increased to
approximately 850, two-thirds licensed
- Capital expenditures of approximately
$1.4 billion driven primarily by store investments, which include
new stores, Mobile Order and Pay and the Evenings program
Company Updates
- Starbucks announced in September that
it will acquire the remaining 60.5% share of Starbucks Coffee Japan
that the company does not currently own, further elevating
Starbucks growth and innovation in its 2nd largest market in retail
store sales.
- The company announced plans to open its
first, interactive Starbucks ReserveTM Roastery and Tasting Room on
December 5 in Seattle; the new roastery will allow the company to
expand its Starbucks Reserve® coffee line to 1,500 locations
globally as well as open 100 stores exclusively designed to
highlight these rare coffees.
- Starbucks celebrated 15 years in Korea
and demonstrated its ongoing global commitment to supporting
opportunities for young people in the community with the opening of
its first community store in the Daehakro neighborhood of
Seoul.
- The company plans to complement its
café experience by investing in smaller, alternative footprint
stores which address the increase in urbanization and
decentralization of retail; these locations will offer a
concentrated set of beverage and food offerings and integrate
Starbucks digital payment platform.
- Starbucks also announced it will debut
Mobile Order and Pay in stores within the Portland, Oregon area in
December, which will enable customers to place orders in advance of
their visit and pick them up at their selected Starbucks location.
The company will continue to roll out Mobile Order and Pay in the
US throughout 2015.
- In August, Starbucks completed its
nationwide rollout of La Boulange food to all Starbucks stores in
the U.S. Starbucks completed the rollout ahead of schedule after
acquiring La Boulange Bakery in June of 2012.
- Starbucks hosted over 2,000 district
managers from around the world in Seattle in early October and
announced a series of investments the company is making in the
partner experience; investments include pay and benefits
enhancements and an updated dress code policy.
- Recently Starbucks, HBO and CHASE Bank
announced that they will host a free concert on the National Mall
in Washington, D.C. on November 11 to honor the courage and
sacrifice of America’s veterans and their families. Starbucks also
reported that more than 1,000 veterans and military spouses were
hired by the company in the past year.
- The company repurchased 10.5 million
shares of common stock in fiscal 2014; approximately 16 million
shares remain available for purchase under current
authorizations.
- The Board of Directors declared a cash
dividend of $0.32 per share, an increase of 23%, payable on
November 28, 2014 to shareholders of record as of November 13,
2014.
Conference Call
Starbucks will be holding a conference call today at 2:00 p.m.
Pacific Time, which will be hosted by Howard Schultz, chairman,
president and ceo; Troy Alstead, coo; and Scott Maw, cfo. The call
will be webcast and can be accessed at http://investor.starbucks.com. A replay of the
webcast will be available through approximately 9:00 p.m. Pacific
Time on Thursday, November 27, 2014.
The company’s consolidated statements of earnings, operating
segment results, and other additional information have been
provided on the following pages in accordance with current year
classifications. This information should be reviewed in conjunction
with this press release. Please refer to the company’s Annual
Report on Form 10-K for the fiscal year ended September 29,
2013 for additional information.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to
ethically sourcing and roasting high-quality arabica coffee. Today,
with stores around the globe, the company is the premier roaster
and retailer of specialty coffee in the world. Through our
unwavering commitment to excellence and our guiding principles, we
bring the unique Starbucks Experience to life for every customer
through every cup. To share in the experience, please visit us in
our stores or online at www.starbucks.com.
Forward-Looking
Statements
This release contains forward-looking statements relating to
certain company initiatives, strategies and plans, as well as
trends in or expectations regarding our diversified business model,
the strength, health and potential of our business, operations and
brand, our innovation, our ability to meet our targets, our ability
to leverage our assets, growth and growth opportunities and related
investments, earnings per share, revenues, operating margins,
profits, capital expenditures, tax rate, expense management,
anticipated gains and costs related to the planned acquisition of
Starbucks Japan, comparable store sales and net new stores. These
forward-looking statements are based on currently available
operating, financial and competitive information and are subject to
a number of significant risks and uncertainties. Actual future
results may differ materially depending on a variety of factors
including, but not limited to, coffee, dairy and other raw material
prices and availability, costs associated with, and the successful
execution of, the company's initiatives, strategies and plans,
including the planned acquisition of Starbucks Japan, the
acceptance of the company's products by our customers, our ability
to preserve, grow and leverage our brand, fluctuations in U.S. and
international economies and currencies, the impact of competition,
the effect of legal proceedings, and other risks detailed in the
company filings with the Securities and Exchange Commission,
including the “Risk Factors” section of Starbucks Annual Report on
Form 10-K for the fiscal year ended September 29, 2013. The
company assumes no obligation to update any of these
forward-looking statements.
STARBUCKS CORPORATION CONSOLIDATED STATEMENTS OF
EARNINGS
(unaudited, in millions, except per share
data)
Quarter Ended Quarter Ended
Sep 28,
2014
Sep 29,
2013
%
Change
Sep 28,
2014
Sep 29,
2013
As a % of total
net revenues (1)
Net revenues: Company-operated stores $ 3,275.7 $ 3,009.6
8.8 % 78.4 % 79.4 % Licensed stores 422.6 346.3 22.0 10.1 9.1 CPG,
foodservice and other(1) 482.5 432.9 11.5 11.5
11.4
Total net revenues 4,180.8 3,788.8
10.3 100.0 100.0 Cost of sales including
occupancy costs 1,723.2 1,633.7 5.5 41.2 43.1 Store operating
expenses 1,152.1 1,073.9 7.3 27.6 28.3 Other operating expenses(1)
111.0 101.1 9.8 2.7 2.7 Depreciation and amortization expenses
185.4 166.1 11.6 4.4 4.4 General and administrative expenses 238.6
226.1 5.5 5.7 6.0 Litigation charge/(credit) — 2,784.1
nm — 73.5 Total operating expenses 3,410.3
5,985.0 (43.0 ) 81.6 158.0 Income from equity investees 84.4
81.0 4.2 2.0 2.1
Operating
income/(loss) 854.9 (2,115.2 ) nm
20.4 (55.8 ) Interest income and other, net
85.7 72.1 18.9 2.0 1.9 Interest expense (16.4 ) (9.1 ) 80.2 (0.4 )
(0.2 ) Earnings before income taxes 924.2 (2,052.2 ) nm 22.1 (54.2
) Income taxes 336.6 (820.1 ) nm 8.1 (21.6 ) Net
earnings/(loss) including noncontrolling interests 587.6 (1,232.1 )
nm 14.1 (32.5 ) Net loss attributable to noncontrolling interests
(0.3 ) (0.1 ) 200.0 — —
Net earnings/(loss)
attributable to Starbucks $ 587.9 $
(1,232.0 ) nm 14.1 %
(32.5 )% Net earnings/(loss) per common
share - diluted $ 0.77 $
(1.64 ) nm Weighted avg. shares outstanding -
diluted 760.8 752.2 Cash dividends declared per share $ 0.32
$ 0.26
Supplemental Ratios: Store operating expenses
as a percentage of company-operated store revenues 35.2 % 35.7 %
Effective tax rate including noncontrolling interests 36.4 % 40.0 %
(1) Prior period results have been
corrected to reflect an immaterial reclassification of certain fees
related to our foodservice operations; for full revised FY12 and
FY13 results, refer to http://investor.starbucks.com.
Year Ended Year Ended
Sep 28,
2014
Sep 29,
2013
%
Change
Sep 28,
2014
Sep 29,
2013
As a % of total net revenues (1)
Net revenues: Company-operated stores $ 12,977.9 $ 11,793.2
10.0 % 78.9 % 79.3 % Licensed stores 1,588.6 1,360.5 16.8 9.7 9.2
CPG, foodservice and other(1) 1,881.3 1,713.1 9.8
11.4 11.5
Total net revenues 16,447.8
14,866.8 10.6 100.0 100.0 Cost of sales
including occupancy costs 6,858.8 6,382.3 7.5 41.7 42.9 Store
operating expenses 4,638.2 4,286.1 8.2 28.2 28.8 Other operating
expenses(1) 457.3 431.8 5.9 2.8 2.9 Depreciation and amortization
expenses 709.6 621.4 14.2 4.3 4.2 General and administrative
expenses 991.3 937.9 5.7 6.0 6.3 Litigation charge/(credit) (20.2 )
2,784.1 nm (0.1 ) 18.7 Total operating expenses
13,635.0 15,443.6 (11.7 ) 82.9 103.9 Income from equity investees
268.3 251.4 6.7 1.6 1.7
Operating
income/(loss) 3,081.1 (325.4 ) nm
18.7 (2.2 ) Interest income and other, net
142.7 123.6 15.5 0.9 0.8 Interest expense (64.1 ) (28.1 ) 128.1
(0.4 ) (0.2 ) Earnings before income taxes 3,159.7 (229.9 ) nm 19.2
(1.5 ) Income taxes 1,092.0 (238.7 ) nm 6.6 (1.6 )
Net earnings including noncontrolling interests 2,067.7 8.8
23,396.6 12.6 0.1 Net earnings/(loss) attributable to
noncontrolling interests (0.4 ) 0.5 nm — —
Net earnings attributable to Starbucks $
2,068.1 $ 8.3 24,816.9
% 12.6 % 0.1 % Net
earnings per common share - diluted $ 2.71
$ 0.01 27,000.0 % Weighted avg.
shares outstanding - diluted 763.1 762.3 Cash dividends
declared per share $ 1.10 $ 0.89
Supplemental Ratios:
Store operating expenses as a percentage of company-operated store
revenues 35.7 % 36.3 % Effective tax rate including noncontrolling
interests 34.6 % 103.8 %
(1) Prior period results have been
corrected to reflect an immaterial reclassification of certain fees
related to our foodservice operations; for full revised FY12 and
FY13 results, refer to http://investor.starbucks.com.
Segment Results
(in millions)
Americas
Sep 28,
2014
Sep 29,
2013
%
Change
Sep 28,
2014
Sep 29,
2013
Quarter
Ended
As a % of Americas
total net revenues
Net revenues: Company-operated stores $ 2,746.0 $ 2,538.7
8.2 % 90.3 % 91.3 % Licensed stores 287.3 231.0 24.4 9.4 8.3 CPG,
foodservice and other 7.8 9.8 (20.4 ) 0.3 0.4
Total net revenues 3,041.1 2,779.5
9.4 100.0 100.0 Cost of sales including
occupancy costs 1,133.1 1,071.3 5.8 37.3 38.5 Store operating
expenses 980.9 923.6 6.2 32.3 33.2 Other operating expenses 25.2
22.8 10.5 0.8 0.8 Depreciation and amortization expenses 122.9
113.1 8.7 4.0 4.1 General and administrative expenses 36.0
42.8 (15.9 ) 1.2 1.5 Total operating expenses
2,298.1 2,173.6 5.7 75.6 78.2
Operating income $ 743.0 $
605.9 22.6 % 24.4 %
21.8 % Supplemental Ratios: Store operating
expenses as a percentage of company-operated store revenues 35.7 %
36.4 %
Year
Ended
Net revenues: Company-operated stores $ 10,866.5 $ 10,038.3 8.3 %
90.7 % 91.3 % Licensed stores 1,074.9 915.4 17.4 9.0 8.3 CPG,
foodservice and other 39.1 47.1 (17.0 ) 0.3
0.4
Total net revenues 11,980.5
11,000.8 8.9 100.0 100.0 Cost of sales
including occupancy costs 4,487.0 4,214.9 6.5 37.5 38.3 Store
operating expenses 3,946.8 3,710.2 6.4 32.9 33.7 Other operating
expenses 100.4 96.9 3.6 0.8 0.9 Depreciation and amortization
expenses 469.5 429.3 9.4 3.9 3.9 General and administrative
expenses 167.8 186.7 (10.1 ) 1.4 1.7
Total operating expenses 9,171.5 8,638.0 6.2 76.6 78.5 Income from
equity investees — 2.4 (100.0 ) — —
Operating income $ 2,809.0 $
2,365.2 18.8 % 23.4 %
21.5 % Supplemental Ratios: Store operating
expenses as a percentage of company-operated store revenues 36.3 %
37.0 %
EMEA
Sep 28,
2014
Sep 29,
2013
%
Change
Sep 28,
2014
Sep 29,
2013
Quarter
Ended
As a % of EMEA
total net revenues
Net revenues: Company-operated stores $ 247.4 $ 232.9 6.2 %
76.9 % 79.4 % Licensed stores 62.6 50.8 23.2 19.5 17.3 CPG,
foodservice and other 11.8 9.7 21.6 3.7 3.3
Total net revenues 321.8 293.4
9.7 100.0 100.0 Cost of sales including
occupancy costs 158.9 150.1 5.9 49.4 51.2 Store operating expenses
85.6 80.1 6.9 26.6 27.3 Other operating expenses 12.3 9.5 29.5 3.8
3.2 Depreciation and amortization expenses 14.9 13.9 7.2 4.6 4.7
General and administrative expenses 12.0 12.9 (7.0 )
3.7 4.4 Total operating expenses 283.7 266.5 6.5 88.2
90.8 Income from equity investees 0.7 0.4 75.0 0.2
0.1
Operating income $ 38.8
$ 27.3 42.1 % 12.1
% 9.3 % Supplemental Ratios: Store
operating expenses as a percentage of company-operated store
revenues 34.6 % 34.4 %
Year
Ended
Net revenues: Company-operated stores $ 1,013.8 $ 932.8 8.7 % 78.3
% 80.4 % Licensed stores 238.4 190.3 25.3 18.4 16.4 CPG,
foodservice and other 42.6 36.9 15.4 3.3 3.2
Total net revenues 1,294.8 1,160.0
11.6 100.0 100.0 Cost of sales including
occupancy costs 646.8 590.9 9.5 50.0 50.9 Store operating expenses
365.8 339.4 7.8 28.3 29.3 Other operating expenses 48.2 38.5 25.2
3.7 3.3 Depreciation and amortization expenses 59.4 55.5 7.0 4.6
4.8 General and administrative expenses 59.1 71.9
(17.8 ) 4.6 6.2 Total operating expenses 1,179.3
1,096.2 7.6 91.1 94.5 Income from equity investees 3.7 0.4
825.0 0.3 —
Operating income $
119.2 $ 64.2 85.7
% 9.2 % 5.5 % Supplemental
Ratios: Store operating expenses as a percentage of
company-operated store revenues 36.1 % 36.4 %
China / Asia Pacific (CAP)
Sep 28,
2014
Sep 29,
2013
%
Change
Sep 28,
2014
Sep 29,
2013
Quarter
Ended
As a % of CAP
total net revenues
Net revenues: Company-operated stores $ 238.4 $ 193.2 23.4 %
76.9 % 75.6 % Licensed stores 71.5 62.5 14.4 23.1
24.4
Total net revenues 309.9
255.7 21.2 100.0 100.0 Cost of sales
including occupancy costs 149.5 125.6 19.0 48.2 49.1 Store
operating expenses 62.6 48.2 29.9 20.2 18.9 Other operating
expenses 13.1 12.4 5.6 4.2 4.8 Depreciation and amortization
expenses 12.7 9.3 36.6 4.1 3.6 General and administrative expenses
15.4 10.9 41.3 5.0 4.3 Total operating
expenses 253.3 206.4 22.7 81.7 80.7 Income from equity investees
47.2 46.7 1.1 15.2 18.3
Operating
income $ 103.8 $ 96.0
8.1 % 33.5 % 37.5 %
Supplemental Ratios: Store operating expenses as a
percentage of company-operated store revenues 26.3 % 24.9 %
Year
Ended
Net revenues: Company-operated stores $ 859.4 $ 671.7 27.9 % 76.1 %
73.2 % Licensed stores 270.2 245.3 10.2 23.9
26.8
Total net revenues 1,129.6 917.0
23.2 100.0 100.0 Cost of sales including
occupancy costs 547.4 449.5 21.8 48.5 49.0 Store operating expenses
221.1 170.0 30.1 19.6 18.5 Other operating expenses 48.0 46.1 4.1
4.2 5.0 Depreciation and amortization expenses 46.1 33.8 36.4 4.1
3.7 General and administrative expenses 58.5 48.4
20.9 5.2 5.3 Total operating expenses 921.1 747.8
23.2 81.5 81.5 Income from equity investees 164.0 152.0
7.9 14.5 16.6
Operating income $
372.5 $ 321.2 16.0
% 33.0 % 35.0 % Supplemental
Ratios: Store operating expenses as a percentage of
company-operated store revenues 25.7 % 25.3 %
Channel Development
Sep 28,
2014
Sep 29,
2013
%
Change
Sep 28,
2014
Sep 29,
2013
Quarter
Ended
As a % of
Channel Development
total net revenues (1)
Net revenues: CPG $ 303.6 $ 266.2 14.0 % 76.1 % 74.9 %
Foodservice(1) 95.5 89.3 6.9 23.9 25.1
Total net revenues 399.1 355.5 12.3
100.0 100.0 Cost of sales 214.9 217.5 (1.2 ) 53.8
61.2 Other operating expenses(1) 44.2 39.0 13.3 11.1 11.0
Depreciation and amortization expenses 0.6 0.2 200.0 0.2 0.1
General and administrative expenses 4.4 4.3 2.3 1.1
1.2 Total operating expenses 264.1 261.0 1.2 66.2
73.4 Income from equity investees 36.5 33.9 7.7 9.1
9.5
Operating income $ 171.5
$ 128.4 33.6 %
43.0 % 36.1 %
Year
Ended
Net revenues: CPG $ 1,178.8 $ 1,056.0 11.6 % 76.2 % 75.5 %
Foodservice(1) 367.2 342.9 7.1 23.8 24.5
Total net revenues 1,546.0 1,398.9
10.5 100.0 100.0 Cost of sales 882.4 878.4 0.5
57.1 62.8 Other operating expenses(1) 187.0 179.4 4.2 12.1 12.8
Depreciation and amortization expenses 1.8 1.1 63.6 0.1 0.1 General
and administrative expenses 18.2 21.1 (13.7 ) 1.2
1.5 Total operating expenses 1,089.4 1,080.0 0.9 70.5
77.2 Income from equity investees 100.6 96.6 4.1 6.5
6.9
Operating income $ 557.2
$ 415.5 34.1 %
36.0 % 29.7 %
(1) Prior period results have been
corrected to reflect an immaterial reclassification of certain fees
related to our foodservice operations; for full revised FY12 and
FY13 results, refer to http://investor.starbucks.com.
All Other Segments
Sep 28,
2014
Sep 29,
2013
%
Change
Quarter
Ended
Net revenues: Company-operated stores $ 43.9 $ 44.8
(2.0 )% Licensed stores 1.2 2.0 (40.0 ) CPG, foodservice and
other(1) 63.8 57.9 10.2
Total net revenues
108.9 104.7 4.0 Cost of sales including
occupancy costs 69.9 67.3 3.9 Store operating expenses 23.0 22.0
4.5 Other operating expenses(1) 16.6 17.9 (7.3 ) Depreciation and
amortization expenses 3.9 3.9 — General and administrative expenses
9.3 10.1 (7.9 ) Total operating expenses 122.7
121.2 1.2
Operating loss $ (13.8
) $ (16.5 ) (16.4 )%
Year
Ended
Net revenues: Company-operated stores $ 238.2 $ 150.4 58.4 %
Licensed stores 5.1 9.5 (46.3 ) CPG, foodservice and other(1) 253.6
230.2 10.2
Total net revenues 496.9
390.1 27.4 Cost of sales including occupancy costs
287.2 239.8 19.8 Store operating expenses 104.5 66.5 57.1 Other
operating expenses(1) 74.6 71.7 4.0 Depreciation and amortization
expenses 15.2 11.7 29.9 General and administrative expenses 42.2
34.9 20.9 Total operating expenses 523.7 424.6
23.3
Operating loss $ (26.8 )
$ (34.5 ) (22.3 )%
(1) Prior period results have been
corrected to reflect an immaterial reclassification of certain fees
related to our foodservice operations; for full revised FY12 and
FY13 results, refer to http://investor.starbucks.com.
STARBUCKS CORPORATION CONSOLIDATED BALANCE
SHEETS
(in millions, except per share data)
(unaudited)
Sep 28,
2014
Sep 29,
2013
ASSETS Current assets: Cash and cash equivalents $ 1,708.4 $
2,575.7 Short-term investments 135.4 658.1 Accounts receivable, net
631.0 561.4 Inventories 1,090.9 1,111.2 Prepaid expenses and other
current assets 285.6 287.7 Deferred income taxes, net 317.4
277.3 Total current assets 4,168.7 5,471.4 Long-term investments
318.4 58.3 Equity and cost investments 514.9 496.5 Property, plant
and equipment, net 3,519.0 3,200.5 Deferred income taxes, net 903.3
967.0 Other assets 198.9 185.3 Other intangible assets 273.5 274.8
Goodwill 856.2 862.9 TOTAL ASSETS $ 10,752.9 $
11,516.7
LIABILITIES AND EQUITY Current liabilities:
Accounts payable $ 533.7 $ 491.7 Accrued litigation charge —
2,784.1 Accrued liabilities 1,514.4 1,269.3 Insurance reserves
196.1 178.5 Deferred revenue 794.5 653.7 Total current
liabilities 3,038.7 5,377.3 Long-term debt 2,048.3 1,299.4 Other
long-term liabilities 392.2 357.7 Total liabilities 5,479.2
7,034.4 Shareholders’ equity: Common stock ($0.001 par value) —
authorized, 1,200.0 shares; issued and outstanding, 749.5 and 753.2
shares, respectively 0.7 0.8 Additional paid-in capital 39.4 282.1
Retained earnings 5,206.6 4,130.3 Accumulated other comprehensive
income 25.3 67.0 Total shareholders’ equity 5,272.0 4,480.2
Noncontrolling interest 1.7 2.1 Total equity 5,273.7
4,482.3 TOTAL LIABILITIES AND EQUITY $ 10,752.9 $ 11,516.7
STARBUCKS CORPORATION CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited and in millions)
Fiscal Year
Ended
Sep 28,
2014
Sep 29,
2013
Sep 30,
2012
OPERATING ACTIVITIES: Net earnings including noncontrolling
interests $ 2,067.7 $ 8.8 $ 1,384.7 Adjustments to reconcile net
earnings to net cash provided by operating activities: Depreciation
and amortization 748.4 655.6 580.6 Litigation charge — 2,784.1 —
Deferred income taxes, net 10.2 (1,045.9 ) 61.1 Income earned from
equity method investees (182.7 ) (171.8 ) (136.0 ) Distributions
received from equity method investees 139.2 115.6 86.7 Gain
resulting from sale of equity in joint ventures and certain retail
operations (70.2 ) (80.1 ) — Stock-based compensation 183.2 142.3
153.6 Excess tax benefit on share-based awards (114.4 ) (258.1 )
(169.8 ) Other 36.2 23.0 23.6 Cash provided/(used) by changes in
operating assets and liabilities: Accounts receivable (79.7 ) (68.3
) (90.3 ) Inventories 14.3 152.5 (273.3 ) Accounts payable 60.4
88.7 (105.2 ) Accrued litigation charge (2,763.9 ) — — Income taxes
payable, net 309.8 298.4 201.6 Accrued liabilities and insurance
reserves 103.9 47.3 (8.1 ) Deferred revenue 140.8 139.9 60.8
Prepaid expenses, other current assets and other assets 4.6
76.3 (19.7 ) Net cash provided by operating activities 607.8
2,908.3 1,750.3 INVESTING ACTIVITIES: Purchase of investments
(1,652.5 ) (785.9 ) (1,748.6 ) Sales of investments 1,454.8 60.2
—
Maturities and calls of investments 456.1 980.0 1,796.4
Acquisitions, net of cash acquired — (610.4 ) (129.1 ) Additions to
property, plant and equipment (1,160.9 ) (1,151.2 ) (856.2 )
Proceeds from sale of equity in joint ventures and certain retail
operations 103.9 108.0 — Other (19.1 ) (11.9 )
(36.5
) Net cash used by investing activities (817.7 ) (1,411.2 ) (974.0
) FINANCING ACTIVITIES: Proceeds from issuance of long-term debt
748.5 749.7 — Principal payments on long-term debt — (35.2 ) —
Payments on short-term borrowings — — (30.8 ) Proceeds from
issuance of common stock 139.7 247.2 236.6 Excess tax benefit on
share-based awards 114.4 258.1 169.8 Cash dividends paid (783.1 )
(628.9 ) (513.0 ) Repurchase of common stock (758.6 ) (588.1 )
(549.1 ) Minimum tax withholdings on share-based awards (77.3 )
(121.4 ) (58.5 ) Other (6.9 ) 10.4 (0.5 ) Net cash used by
financing activities (623.3 ) (108.2 ) (745.5 ) Effect of exchange
rate changes on cash and cash equivalents (34.1 ) (1.8 ) 9.7
Net (decrease)/increase in cash and cash equivalents (867.3 )
1,387.1 40.5 CASH AND CASH EQUIVALENTS: Beginning of period 2,575.7
1,188.6 1,148.1 End of period $ 1,708.4
$ 2,575.7 $ 1,188.6 SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION: Cash paid during the period for: Interest, net of
capitalized interest $ 56.2 $ 34.4 $ 34.4 Income taxes, net of
refunds $ 766.3 $ 539.1 $ 416.9
Supplemental
Information
The following supplemental information is provided for
historical and comparative purposes.
Fiscal Fourth
Quarter 2014 U.S. Supplemental Data
Quarter Ended ($ in millions)
Sep 28, 2014 Sep 29, 2013 Change
Revenues $2,706.7 $2,451.3 10% Comparable Store Sales
Growth(1) 5% 8% Change in Transactions 1% 5% Change in Ticket 4%
3% (1) Includes only Starbucks
company-operated stores open 13 months or longer
Store
Data:
Net stores opened (closed) during the period
Quarter Ended Year Ended
Stores open as of
Sep 28,
2014
Sep 29,
2013
Sep 28,
2014
Sep 29,
2013
Sep 28,
2014
Sep 29,
2013
Americas Company-operated stores 162 164 317 276 8,395 8,078
Licensed stores 117 176 381 404 5,796
5,415 279 340 698 680 14,191
13,493 EMEA(1) Company-operated stores (10 ) (6 ) (9 ) (29 )
817 826 Licensed stores 48 34 180 129
1,323 1,143 38 28 171 100 2,140
1,969 CAP(2) Company-operated stores 91 79 250 239 1,132 882
Licensed stores 108 118 492 349 3,492
3,000 199 197 742 588 4,624
3,882 All Other Segments(3) Company-operated stores (9 ) 7
12 343 369 357 Licensed stores (4 ) (14 ) (24 ) (10 ) 42 66
(13 ) (7 ) (12 ) 333 411 423
Total
Company 503 558 1,599
1,701 21,366 19,767
(1) EMEA store data has been adjusted for
the transfer of certain company-operated stores to licensed stores
in the second and fourth quarters of fiscal 2014.
(2) CAP store data has been adjusted for
the transfer of certain company-operated stores to licensed stores
in the fourth quarter of fiscal 2014.
(3) Net new stores for the year ended
September 29, 2013 includes 337 Teavana stores acquired in the
second quarter of fiscal 2013.
Non-GAAP Disclosure
In addition to the GAAP results provided in this release, the
company provides non-GAAP operating income, non-GAAP operating
margin and non-GAAP earnings per share (“non-GAAP EPS”) for Q1
fiscal 2014, Q4 fiscal 2013 and fiscal 2014, full year fiscal 2013
and fiscal 2014, and projected non-GAAP EPS for Q1 fiscal 2015 and
full year fiscal 2015. These non-GAAP financial measures are not in
accordance with, or an alternative for, generally accepted
accounting principles in the United States. The GAAP measures most
directly comparable to non-GAAP operating income, non-GAAP
operating margin, and non-GAAP EPS are operating income, operating
margin, and diluted net earnings per share, respectively. The
company’s management believes that providing these non-GAAP
financial measures better enables investors to understand and
evaluate the company’s historical and prospective operating
performance.
The Q4 and full year fiscal 2013 non-GAAP financial measures
provided in this release exclude the impact of the litigation
charge associated with the Kraft arbitration matter in Q4 fiscal
2013, as well as gains on the sales of Starbucks equity in its
Mexico joint venture in Q2 fiscal 2013 and its Chile and Argentina
joint ventures in Q4 fiscal 2013. The Q1, Q4 and full year fiscal
2014 non-GAAP financial measures provided in this release exclude
the benefit recognized from a Kraft related litigation credit in Q1
fiscal 2014 and the net benefit from transactions in Q4 fiscal
2014. The net benefit from transactions in Q4 fiscal 2014 includes
a gain on the sale of our Malaysia equity method investment,
partially offset by a loss on the sale of our Australia retail
operations and transaction costs incurred related to the planned
acquisition of Starbucks Japan. Management excludes these items
because they believe the impacts do not reflect expected future
gains and expenses and do not contribute to a meaningful evaluation
of the company’s future operating performance or comparisons to the
company’s past operating performance.
The projected non-GAAP EPS for Q1 and full year fiscal 2015
exclude an anticipated acquisition-related gain in Q1 fiscal 2015
resulting from a fair value adjustment of Starbucks current 39.5%
ownership interest in Starbucks Japan, as well as
acquisition-related costs, including transaction and integration
costs and amortization of acquired intangible assets. Management
believes that the acquisition-related gain and transaction costs
described above do not reflect expected future gains and expenses
beyond fiscal 2015. In addition, we believe it is useful to exclude
the integration costs and the amortization of the acquired
intangible assets when evaluating performance because they are not
representative of our core business operations. Although these
items will affect earnings per share beyond fiscal 2015, the
majority of these costs will be recognized over a finite period of
time. More specifically, the amounts of the acquired intangible
assets are specific to the transaction and the related amortization
is fixed at the time of acquisition and generally cannot
subsequently be changed or influenced by management in a future
period. Therefore, these items do not contribute to a meaningful
evaluation of the company’s fiscal 2015 operating performance or
comparisons of the company’s fiscal 2015 operating performance to
the company’s past operating performance.
These non-GAAP financial measures may have limitations as
analytical tools, and these measures should not be considered in
isolation or as a substitute for analysis of the company’s results
as reported under GAAP. Other companies may calculate these
non-GAAP financial measures differently than the company does,
limiting the usefulness of those measures for comparative
purposes.
STARBUCKS CORPORATION RECONCILIATION
OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(unaudited)
Sep 28,
2014
Sep 29,
2013
Change
Quarters
Ended
Operating income/(loss), as reported (GAAP) $ 854.9 $ (2,115.2 )
nm
(1)
Litigation charge — 2,784.1 Costs from transactions in Q4 2014(2)
2.4 — Non-GAAP operating income $ 857.3 $
668.9 28.2 % Operating margin, as reported (GAAP)
20.4 % (55.8 )%
nm
(1)
Litigation charge — 73.5 Costs from transactions in Q4 2014(2) 0.1
— Non-GAAP operating margin 20.5 % 17.7 % 280 bps
Diluted net earnings/(loss) per share, as reported (GAAP) $
0.77 $ (1.64 )
nm
(1)
Litigation charge — 2.27 Gain on sale of equity in Chile and
Argentina joint ventures — (0.03 ) Net benefit from transactions in
Q4 2014(3) (0.03 ) — Non-GAAP net earnings per share $ 0.74
$ 0.60 23.3 %
Years
Ended
Operating income/(loss), as reported (GAAP) $ 3,081.1 $ (325.4 )
nm
(1)
Litigation charge/(credit) (20.2 ) 2,784.1 Costs from transactions
in Q4 2014(2) 2.4 — Non-GAAP operating income $
3,063.3 $ 2,458.7 24.6 % Operating margin, as
reported (GAAP) 18.7 % (2.2 )%
nm
(1)
Litigation charge/(credit) (0.1 ) 18.7 Costs from transactions in
Q4 2014(2) — — Non-GAAP operating margin 18.6 % 16.5
% 210 bps Diluted net earnings per share, as reported (GAAP)
$ 2.71 $ 0.01 27,000.0 % Litigation charge/(credit) (0.02 ) 2.25
Gain on sale of equity in Mexico joint venture — (0.03 ) Gain on
sale of equity in Chile and Argentina joint ventures — (0.03 ) Net
benefit from transactions in Q4 2014(3) (0.03 ) — Non-GAAP
net earnings per share $ 2.66 $ 2.19 21.5 %
(1) nm - not meaningful
(2) Includes a portion of the transaction
costs incurred in Q4 FY14 related to the planned acquisition of
Starbucks Japan and costs related to the sale of our Australia
retail operations in Q4 FY14. The remaining majority of the impact
from these transactions is included in net interest income and
other.
(3) The net benefit from transactions in
Q4 2014 relates primarily to a $0.05 gain on the sale of our
Malaysia equity method investment, partially offset by a loss on
the sale of our Australia retail operations and transaction costs
incurred in Q4 FY14 related to the planned acquisition of Starbucks
Japan.
Dec 28,
2014
Dec 29,
2013
Quarters
Ended
(Projected) (As Reported)
Change Diluted net earnings per
share (GAAP) $1.20 - $1.28 $ 0.71
69% - 80%
Litigation credit — (0.02) Starbucks Japan acquisition-related
items - gain(2) (0.43) - (0.49) — Starbucks Japan
acquisition-related items - other(3)
0.02 - 0.02
— Non-GAAP net earnings per share $0.79 - $0.81 $ 0.69
14% - 17%
Sep 27,
2015
Sep 28,
2014
Years
Ended
(Projected) (As Reported)
Change Diluted net earnings per
share (GAAP) $3.42 - $3.54 $ 2.71
26% - 31%
Litigation credit — (0.02) Net benefit from transactions in Q4
2014(1) — (0.03) Starbucks Japan acquisition-related items -
gain(2) (0.43) - (0.49) Starbucks Japan acquisition-related items -
other(3) 0.09 - 0.08 — Non-GAAP net earnings per share $3.08 -
$3.13 $ 2.66
16% - 18%
(1) The net benefit from transactions in
Q4 2014 relates primarily to a $0.05 gain on the sale of our
Malaysia equity method investment, partially offset by a loss on
the sale of our Australia retail operations and transaction costs
incurred in Q4 FY14 related to the planned acquisition of Starbucks
Japan.
(2) Represents an anticipated
acquisition-related gain in the first quarter of fiscal 2015
resulting from a fair value adjustment of Starbucks current 39.5%
ownership interest in Starbucks Japan.
(3) Includes other acquisition-related
costs, such as the ongoing amortization expense of significant
acquired intangible assets and transaction and integration
costs.
Starbucks Contact, Investor Relations:JoAnn DeGrande,
206-318-7118investorrelations@starbucks.comorStarbucks Contact,
Media:Alisha Damodaran, 206-318-7100press@starbucks.com
Starbucks (NASDAQ:SBUX)
Historical Stock Chart
From Apr 2024 to May 2024
Starbucks (NASDAQ:SBUX)
Historical Stock Chart
From May 2023 to May 2024